Sound Off: What is the market status right now?

Sentinel Media Services |
September 6, 2013

A: I am frequently asked at parties, in casual conversations with friends and neighbors, etc. about what's really happening in the real estate market now. They are eager to hear my report from the trenches.

People have all sorts of stories to share: neighbors whose homes sold for tens of thousands if not hundreds of thousands of dollars above the asking price; houses that sold in multiple offer with 15, 20, 30 or more buyers competing for the same place.

Most of these tales recounted either amaze those considering selling their homes, intimidate those thinking of jumping into the housing market fray, or even depress those who may be weary from several failed attempts to prevail in purchasing the home they really want.

It's most likely obvious to many that the market continues to be very healthy. Although existing sales of single-family residences in California overall were down 4.4 percent as of the end of May, according to the California Association of Realtors, the reason is simply lack of inventory available for purchase.

In a normal market there is a housing supply that can be absorbed in a 6 - 7-month period of time. In the spring of this year, the number of houses for sale dropped to a 2.6-month supply (similar to inventory levels in 2005).

Interestingly, Alameda County saw an increase of 13.7 percent in sales volume, with the median home price rising from $537,800 to $662,040 since July 2012.

The rapid rise in property value has much to do with the type of properties being sold. Most of the foreclosed properties owned by the banks and the short sales (in which the lenders agree to a sales price below the amount of loan owed against the property) are gone. 78.2 percent of the sales closed statewide in May were "conventional sales" (private seller to private buyer). These properties sold for more money, which was then reflected in the rise in our median home prices.

Interest rates, which have been hovering at historical lows since early 2012, have further fueled the market, and are an important dynamic of the overall market recovery.

Low rates have created strong, positive housing affordability and have lured investors into the real estate market, many of whom brought all-cash deals to the table (35 percent of transactions). Recently, rates have begun to rise (almost a full percentage point in the past year) which will impact affordability for some.

Too many facts and figures? Just know our home values are appreciating quickly and will most likely continue to do so as long as buyer demand remains greater than housing supply.

But have faith. Slowly but surely, inventory will increase (as it always does), making the market more friendly for those seeking to own their piece of the American Dream.

A market that is more of an even playing field will certainly be a refreshing change, for sure.